TaxTMI 
TaxTMI 
2012 (1) TMI 241
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....cts and in circumstances of the case the Ld. CIT(A) was justified in holding that under section 153A, expenses not recorded in the books of account or not noted in seized material can be allowed on presumptive basis. 3) Whether on the facts and in the circumstances of the case the Ld. CIT(A) was justified in directing the AO to tax the "on money" receipts and advances in the year of transfer of shops instead of in the year of receipt of the money. 4) Whether on the facts and in the circumstances of the case the ld. CIT(A) was justified in relying on the decision of the Tribunal in the case of Golani Bros Vs. ACIT 75 ITD 1 ignoring the fact that the facts of the present case and that of the Golani Bros are not identical and the decision of the Tribunal is under litigation before the High Court, Bombay. A.Y. 2003-04 1) Whether on the facts and in the circumstances of the case the Ld. CIT(A) was justified in deleting the addition of ₹ 9,93,000/- on a/c of advances and ₹ 3,00,000/- on account of on-money during the transfer of shops directing the A.O. that the advances should be taxed in the year of transfer and not in the year of receipt of the money. 2) Whether on th....
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....d in the circumstances of the case the Ld. CIT(A) was justified in relying on the decision of the Tribunal in the case of Golani Bros Vs. ACIT 75 ITD 1 ignoring the fact that the facts of the present case and that of the Golani Bros are not identical and the decision of the Tribunal is under litigation before the High Court, Bombay. 3) Whether on the facts and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of ₹ 45,600/- on a/c of disallowance of watchman's salary and of ₹ 40,150/- on account of supervision charges and ₹ 8,804/- on account of disallowance of dismantling expenses which were not supported by any evidence or seized material holding that expenses not recorded in the books of account or not noted in seized material can be allowed on presumptive basis. 4) Whether on the facts and in the circumstances of the case the Ld. CIT(A) was justified in restricting the addition u/s 69C from ₹ 2,14,663/- to ₹ 1,72,663/-, allowing relief of ₹ 42,000/- ignoring the fact that source of such expenditure was unexplained and would be deemed to be the income of the assessee for the relevant financial year as is h....
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....3 to 35 of the first appellate order are as under : "3. Brief facts of the case are that search and seizure action was conducted against the Agrawal group at Chalisgaon onI 03/11/2004. The appellant is a partnership firm engaged in the business of builders and contractors for construction work. During the course of action u/s.132 diaries were seized at Annexure A-I to A-3 containing notings in respect of business transactions of the appellant firm in respect of amounts received by Agrawal Group from customers of the two municipal development projects undertaken by M/s.Tejas Constructions at S.No.4016 and F.P.48 of Chalisgaon. The notings in seized diaries revealed that the cash received from the customers of shop at the said projects at C.S.No.4016 and F.P. 48 Chalisgaon was to the tune of ₹ 10,25,000/- and ₹ 75,48,OOO/- respectively totalling to Rs..85,73,OOO/-. Further advances received from the said projects noted in the diaries from project at FP 48 and S.No. 4016 were to the tune of ₹ 33,28,000/- and ₹ 32,54,000/- respectively, totalling to ₹ 65,82,000/-. The partners of the appellant firm therefore declared additional income of ₹ 85,00,000....
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.... Asst. Year. M/s.Teias Constructions Sitamai Altro Farms 2003-2004 4,03,230 0 2004·2005 1,38,900 803114 2005-2006 1,85.500 0 Total 7,27,630 8,03,114 3.3 While assessing unrecorded premium on sale of plots the A.O. has allowed expenditure on account of commission on sale at 2% and disallowed all the other expenses claimed by the appellant. The details of the same are as under: A.Y. Premium Commission 2% Addition 2005-06 1,85.500 3,710 1,81,790 2004·05 1.38.900 2.778 1,36,122 2003-04 4.03.230 8.065 395.165 TOTAL 7,27,630 14553 7,13,077 3.4 The appellant firm has offered to tax unrecorded premium money received in respect of sale of shops and plots in the year of transfer and possession of the same to customers. The appellant has also claimed unrecorded expenditure against the sale of shops and plots incurred out of on-money received. The appellant has prepared separate profit and loss accounts for the same and offered additional income of ₹ 61,60,946/- in returns of income for A.Ys 2003-2004, 2004-2005 & 2005-2006 filed in response to notices u/s.153A of the Act as under : Income AY. 2005·06 AY. 2004-05 AY. ....
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....ards construction of shop and other business expenses. He placing reliance on the decisions of Pune Bench of the Tribunal in the cases of Golani Bros., Vs. ACIT 75 ITD 1, (Pune) and Dhanvarsha Builders & Developers (P) Ltd. Vs. DCIT (2006) 102 ITD 376 (Pune) has directed the A.O to delete the addition made of ₹ 65,82,000/- in respect of advances received and taxed in A.Ys. 2000-01 to 2005-06. The Ld. CIT(A) has directed to tax the receipt of on money in the year of transfer of possession given to the customers. 7. The A.O. in the assessment for A.Y. 2001-02 has observed that the assessee has not considered the addition of ₹ 1,09,384/- made u/s.143(3) while filing the return u/s. 153A. The Ld CIT(A) in this regard has held that the assessee had accepted the addition made by the A.O in the original assessment, u/s. 143(3) and has paid all the taxes, hence separate addition in the order u/s. 153A read with section 143(3) is not justified. 8. Against the above action of the Ld CIT(A), revenue is in appeal before us. 9. In support of the grounds and additional grounds raised by the revenue, Ld. D.R. has basically placed reliance on the assessment order whereas the ld. A.R....
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....lex market for Jalgaon Municipal Corporation. A search and seizure operation u/s. 132 was carried out at the premises of the assessee wherein it was revealed that the assessee had received consideration for shops which was partially recorded in the books of accounts and partly in the form of 'on-money' which was not recorded in the books of account. The assessee in that case had also incurred expenditure which was partly recorded in the books of account and was partly incurred out of books. The relevant paragraphs of the order of the Tribunal in the case of Golani Brothers is para No. 42 wherein while deciding the taxability of income and 'on-money', the Tribunal has laid down various steps summarized as under : "First step - To consider total cost of the project as per books of accounts Second step - To increase the above cost by unaccounted expenditure Third Step - Such total cost of the project is to be bifurcated on the total salable area constructed. Determine cost of salable area per sq.ft. Fourth step - To determine cost of construction year wise in respect of salable area of the shops sold in each year. Fifth step - To determine the sum of on-money year-wise in respect....
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....eceipts. It was also his case that but for the survey these receipts would not have come to the notice of the department and would have escaped assessment. Therefore, these receipts should be taxed on cash basis. We are unable to agree with this argument. It may happen that a trader receives sale consideration in cash by cheque or payment through credit card. It may also happen that the assessee may have intention to hide the whole or part of cash sales and such intention may detected in the course of search or survey. Nonetheless, a cash receipt does not partake a different a different character from other receipts merely because it was received in cash and possible because there was some intention to evade its disclosure to the department. We are of the view that the character of receipt is to be found out from the nature of transaction. In the instant case, the assessee received certain amounts by way of cheques and received certain other amounts by way of cash, which were detected in the course of survey. Both these receipts were in pursuance of agreements from sale of flat/shop. The assessee has been recognizing income on sale basis. Therefore, both the cash receipts and the c....
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....rofession' or 'income from other sources' shall be computed only in accordance with either the cash or mercantile system of accounting regularly employed by on assessee." 13. In view of the above decision, covering the issue raised in the present appeal under almost similar facts, we are of the view that the Ld CIT(A) has rightly accepted the contention of the assessee on the issue. We thus do not find reason to interfere with the same. The same is upheld. 14. The issue raised in additional Ground Nos. (ii) & (iii) is thus decided in favour of the assessee. This issue is common in all A.Ys. under consideration. Additional ground no. (i_) in A.Y. 2001-02 and issue no. 1, in A.Y. 2001-02; 1 & 2 in A.Y. 2002-03; 3 in A.Y. 2003-04 & 2004-05; and 3 & 4 in A.Y. 2005-06. 15. Additional ground no. (i) raised in the A.Y. 2001-02 is general in nature, hence does not need adjudication. Besides, in the A.Y. 2001-02, the Revenue has questioned the first appellate order whereby the Ld CIT(A) has deleted the addition of ₹ 1,09,325/- made on account of undisputed disallowance already made u/s. 143(3) which was no disclosed by the assessee in the return filed in response to notice u/s. 15....
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....ered by the decision of Delhi Bench of the Tribunal in the aforesaid case, and by the decision of Pune Bench in the case of assessee itself for A.Ys. 1999-00 and 2000-01. We thus do not find infirmity in the first appellate order based upon the above cited decision of Delhi Bench of the Tribunal in this regard. The same is upheld. The issue no. 1 raised in A.Y. 2001-02 is accordingly rejected. In other issues raised in the appeals for different Assessment Years, the revenue has questioned the deletion/reduction of different disallowances made by the ld. CIT(A). In support the ld. D.R. has tried to justify the disallowances made by the A.O. We have dealt with these issues head-wise hereunder. Dismanting Expenses 19. In the A.Ys. 2002-03 and 2004-05, the A.O has disallowed ₹ 2,49,000/- and ₹ 19,954/- respectively on account of dismantling expenses. The Ld CIT(A) has deleted the same. 20. The assessee had claimed dismantling expenses at ₹ 1,80,000/- for A.Y. 2000-01 and ₹ 1,60,000/- for A.Y. 2001-02 on the basis of architects' services. The A.O did not accept the claim on the basis that no such evidence of dismantling expenses was found noted in the seized m....
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....A.Y. 2004-05. In respect of on money receipt up-to the date of action u/s. 132 of the Act, A.Y. 2005-06 amounting to ₹ 54,20,000/- the A.O has worked out commission at 2% of ₹ 1,08,400/-. The A.O has allowed commission amounting to ₹ 63,233/- proportionately for 7 months i.e. up to search of 3.11.2004. 23. The Ld. D.R. submitted that above stated claimed expenses were not supported by any evidence or seized material and have been allowed by the Ld CIT(A) on presumptive basis in the assessment u/s. 153A. The Ld A.R., on the other hand, tried to justify the first appellate order on the issue. 24. In respect of disallowance of the commission expenditure to the employee of assessee firm, Shri K.B. Chhajed in A.Y. 2005-06, the assessee contended that it is not likely that employee who was working for 8 hours for the assessee firm would not have been paid any salary. The A.O disallowed the payument to the employer amounting to ₹ 4 lakhs in A.Y. 2004-05 and ₹ 2,30,000/- in A.Y. 2003-04 on the basis that the search assessment proceedings to be fully on material seized and no notings about such expenditure was found in seized material. The assessee, however, ....
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....s for payment and the affidavits of watchmen filed after the date of search has no evidentiary value. 26. The assessee raised similar contention that in respect of search after 1.6.2003, provisions of Section 153A, 153B and 153C would become applicable to such search assessments and as per the new scheme of search assessments, there is no requirement for an assessment u/s 153A to be based on any material seized in the course of search. In support, the decision of Delhi Bench of the Tribunal in the case of Shivnath Rai Harnarayanan (India) Limited Vs. DCIT (Supra) was relied. 27. The Ld. CIT(A) accepting the above submissions of the assessee and in view of the decision of Delhi Bench of the Tribunal in the case of Shivnath Rai Harnarayanan (India) Limited Vs. DCIT (Supra) has held that the quantum of salary claimed by the assessee in each year is reasonable in view of 3 sites requiring services of watchmen. The first appellate order on the issue is reasoned one. Hence, we are not inclined to interfere therewith. The same is upheld. Issue no. 3 relating to watchman salary in A.Ys. 2003- 04, 2004-05 and 2005-06 is thus decided against the revenue. Supervision Charges 28. In the A.....